In re Estate of Hitchens

• Decision Date: 31 March 1920
• Citation: 12 Del.Ch. 417,109 A. 574
• Court: Court of Chancery of Delaware
• Parties: In the Matter of the Estate of GEORGE E. HITCHENS, deceased

109 A. 574

12 Del.Ch. 417

In the Matter of the Estate of GEORGE E. HITCHENS, deceased

Court of Chancery of Delaware, Sussex

March 31, 1920

PETITION TO SELL LAND TO PAY DEBTS. An order for the sale of lands of George E. Hitchens, deceased, for payment of his debts having been made, his son, George E. Hitchens, Jr., by answer set up a deed made to him in 1903 for three and one-half acres, part of the land to be sold, and asked that that part be not sold. The other facts appear in the opinion of the Chancellor, who heard the cause in the absence of the Resident Judge.

Three and one-half acres tract was subject to be sold to pay the judgment of Gray against Hitchens, notwithstanding the deed made by Hitchens, and sale confirmed.

James M. Tunnell, for the administrator of George E. Hitchens deceased. Argued as follows:--

The words "fair creditor" are unambiguous and do not mean either "judgment creditor" or "judgment lien creditor." The purpose was to afford protection to those who extend credit to the apparent owner of the land. As the Orphans' Court can order land of a decedent sold to pay all his debts, the question whether a creditor has a judgment, or a judgment lien on the land, does not arise in the Orphans' Court. When the creditor presents himself in the proper court he may then under the recording statute go back to the origin of his debt and show, if he can, that when the debt was contracted the deed with which he is confronted existed and was kept secret by being withheld from the proper office. The recording act fixes the right of those who deal with the owner of the record title, and give credit on the strength of such title. A deed not recorded within three months is not merely void until it is recorded, but void for all time as to subsequent fair creditors without notice otherwise the statute would give no protection.

The following cases were cited: Reed v. Austin's Heirs, 9 Mo. 722, 45 Am. Dec. 336; King v. Fraser, 23 S.C. 543.

Daniel J. Layton, for George E. Hitchens, Jr., the grantee of the three and one-half acres, argued as follows: That the recording statute protects lien creditors only, and cited in support the following decisions: Martin v. Dryden, 1 Gilman, 187 (6 Ill. 187); Loughbridge v Bowland, 52 Miss. 546; Bowen v. Lansing, etc., 91 Tex. 385, 43 S.W. 872; Eason v. Garrison, 36 Tex. Civ. App. 574, 82 S.W. 800; Button v. Rathbone, 126 N.Y. 187, 27 N.E. 266; Farmers', etc., Bank v. Anthony, 39 Neb. 343, 57 N.W. 1029; Reiss v. Argubright, 3 Neb. Unoff. 756, 92 N.W. 988; Youngberg v. Walsh, 73 Kan. 220, 83 P. 975; Holt v. Crucible Steel Co., 224 U.S. 262, 32 S.Ct. 414, 56 L.Ed. 756; Nauman Co. v. Bradshaw, 193 F. 350, 113 C. C. A. 274; Milton v. Boyd, 49 N.J.Eq. 142, 22 A. 1082.

Therefore the Orphans' Court could not sell land of the grantee of the three and one-half acres to pay judgments which were not liens. After the expiration of the liens the grantee could have alienated the land freed of liability on the judgments, and the death of the grantor gave the judgment creditors no further or greater rights. The grantee omitted at his peril to record his deed, and the creditors omitted at their peril to preserve their liens, and both having been guilty of laches, the former will be penalized in favor of the latter.

CURTIS P. J., sitting.

OPINION

CURTIS, P. J. The case is one where George E. Hitchens, owning a farm, conveyed three and one-half acres, part thereof, to his son George E. Hitchens, Jr., in 1903 by deed not recorded until 1919, which was after the death of the grantor. At the death of the grantor there were two unsatisfied judgments in the Superior Court against him for the payment of money, one in favor of Frederick T. Warrington entered April 2, 1894, payable January 1, 1895, and the other in favor of Benjamin F. Gray entered December 7, 1907, payable on the same day. By virtue of the Statute more than ten years having passed since the judgments became payable and no proceeding to extend the lien thereof having been taken, neither of the judgments was a lien on land of George E. Hitchens after December 8, 1917.

The grantor having died on June 14, 1917, intestate, letters of administration were granted to Benjamin F. Gray, and application was made by him to the Orphans' Court for the sale of all of the land of the deceased for the payment of his debts, his personal estate being insufficient for the purpose. In the account submitted by the administrator with his petition the above mentioned judgments and others were set out as debts due from the decedent. At the hearing of the petition of the administrator George E. Hitchens, Jr., the grantee of part of the farm and one of the heirs at law of the decedent, filed an answer alleging the conveyance to him of the three and one-half acres and asking that the land so conveyed to him be not sold. Thereupon on December 2, 1919, the Court made an order for the sale of the farm excluding the three and one-half acres, and that that tract be not sold if the proceeds of the sale of the other land be sufficient to pay the debts of the decedent. By the return of the administrator it appears that it was necessary to sell all the land to pay the debts, and the Court confirmed the sale as to all but the three and one-half acre tract, and confirmation of the sale of it has been held under advisement pending a hearing as to whether it was subject to be sold. Briefs have been submitted by counsel for the administrator and judgment creditor, and for the grantee of the three and one-half acres of land. The administrator is the plaintiff in the second judgment.

Here, then, one owning land conveyed part of it in 1903 by deed not recorded until 1919. At the death of the grantor in 1917 there were two unsatisfied judgments against him, neither of which were liens on his land. Can the land conveyed by the deed be sold by order of the Orphans' Court for the payment of the two judgments? Or, stated otherwise, shall the deed avail against the two judgment creditors as "subsequent fair creditors" of the grantor in the deed?

Two statutes of the State are involved in the consideration of the questions here raised. By one statute after the lien of a judgment has expired and the judgment is thereafter revived it shall be a lien from the time of revival,

"but such lien shall not relate back, nor shall it in any manner affect any prior bona fide purchaser or mortgagee from or judgment creditor of such defendant. * * *" Revised Code of 1915, c. 132, § 15, par. 4296, p. 1935.

The other statute is one relating to recording of deeds. By it deeds may be recorded at any time. Revised Code of 1915, c. 92, § 23, par. 3219, p. 1490. By section 22 (paragraph 3218, p. 1489) it is provided thus:

"If a deed concerning lands or tenements be not recorded in the proper office within three months after the day of the sealing and delivery thereof, said deed shall not avail against a subsequent fair creditor, mortgagee or purchaser for a valuable consideration unless it shall appear that such creditor when giving the credit, or such mortgagee or purchaser, when advancing the consideration, had notice of such deed."

The same language paraphrased in form is also contained in section 23.

The statute limiting the lien of judgments will be considered first. It was assumed in the briefs, and there is in the record of the cause nothing to the contrary, that the grantee was a bona fide purchaser from the judgment debtor. It also appears that neither of the two judgments are or were at the death of the defendant therein liens on his land, and that a lien on the land conveyed cannot now be acquired on either of the judgments. If revived by scire facias, or otherwise, the lien would not relate back so as to affect the land, for the grantee was a bona fide purchaser from the defendant in the judgments. It follows by the decision of the Supreme Court in the case of Cohen v. Tuff, 27 Del. 188, 4 Boyce 188, 86 A. 833, Ann. Cas. 1917C, 596, that if the deed had been recorded within three months the Orphans' Court could not order the land which had been so conveyed sold for payment of the two judgments. In the case cited several judgment liens expired in June, 1901, and in July, 1901, land theretofore subject to the lien of that judgment was conveyed to a bona fide purchaser by the devisee of the judgment debtor. A contract for the sale of the land having been made and the purchaser having declined to take the title because of the unsatisfied judgments, the facts were submitted to the Superior Court on a case stated, and its judgment reviewed in the appellate court. It was held that the land in the hands of the bona fide purchaser could not be reached by proceedings directly on the judgments by scire facias, or otherwise, and that "for the same reason it cannot be reached in the Orphans' Court by an order to sell lands to pay the debts of the same judgments."

It was concluded, therefore, that the purchaser should perform the contract because the holder of the judgments could not in any legal proceeding reach the land in question. The statement as to the powers of the Orphans' Court was pertinent and vital to the result attained by the decision, and was not in any sense obiter, or mentioned as an illustration, for it was discussed by the Court whether a sale through the Orphans' Court was a possible danger to the prospective purchaser. It should be noted that the lien had expired when the conveyance was made by the judgment debtor, and that is made clear in the opinion. But it was not indicated there that the result would have been different if the conveyance had been made before the lien had expired, and there is no reason to make a different rule in such case. The case of Raymond...